THINK IT Services

The proliferation of Software-as-a-Service (SaaS) and cloud computing platform players continues to accelerate despite the failure of some early entrants and likelihood of more Platform-as-a-Service (PaaS) casualties to come.

This past week, three more companies announced new platform strategies and solutions — Jaspersoft, ExpenseWatch.com, LongJump.

Open-source business intelligence (BI) vendor Jaspersoft unveiled its v3.5 integrated analysis capabilities as part of what it calls the industry’s first SaaS-enabled BI platform. The new platform promises easy-to-use integrated analysis that doesn’t require a data warehouse or OLAP server. It also includes new in-memory analysis capabilities that enables the delivery of customizable SaaS and Cloud-based BI applications which can be integrated into reports and dashboards.

ExpenseWatch.com announced an open expense control platform which will permit small and midsized businesses (SMBs) to integrate their expense management data with a variety of business application. The new “non-proprietary approach” promises to allow SMBs to create more streamlined processes to manage their expenses.

LongJump announced that its previously available LongJump Business Applications Platform can now be licensed for use within an enterprise’s data center or licensed by independent software vendors (ISVs) who want to build and host their own SaaS applications. This new ‘portability’ is in response to the growing demands among enterprises to house their SaaS apps behind the firewall. It is also another example of the rapid technological advancements in the SaaS/cloud computing industry which increasingly permits this new form of ‘hybrid’ solution to occur.

While LongJump asserted itself as a PaaS vendor a while ago and its solution truly permits enterprise users and ISVs to build new SaaS apps via its development environment, ExpenseWatch.com and JasperSoft appear to be stretching the meaning of the PaaS idea to bring greater attention to their new integration capabilities.

Rather than being a toolkit upon which others can build SaaS apps, they are really offering easy-to-integrate functional capabilities which can be plugged into homegrown or third-party SaaS apps. This is still a valuable advancement of their previous capabilities, and represent the latest examples of the growing plug-and-play nature of the SaaS/cloud computing industry.

But given the proliferation of platform players and recent demise of Coghead, a pioneer in the PaaS market, I think SaaS/cloud computing companies would be better served by using different terminology to describe their integration capabilities.

Bastardizing the idea of platforms and PaaS will only clutter the marketplace and confuse potential customers. It will also increase the likelihood of an industry shakeout which will further discourage IT/business decision-makers from leveraging these ‘platform’ solutions.

Debating the meaning of ‘cloud computing’ has become a popular pastime among analysts, journalists, vendors and even customers.

The latest entrant into the discussion is the Wall Street Journal which published an article today entitled, “The Internet Industry Is on a Cloud — Whatever That May Mean.” (Registration may be required.)

In addition to raising the fundamental question about how to properly define cloud computing, the WSJ article also mentions Oracle CEO/Chairman’s Larry Ellison’s comments over the past few years downplaying the market opportunity for cloud computing and Software-as-a-Service (SaaS) solutions.

Although I’ve offered my own views on this topic before in this space, here are some additional thoughts in response to the WSJ article:

1. What is cloud computing?

Cloud computing is a set of web-based enabling tools and services which permit users to acquire computing capabilities to build or support applications, or perform specific functions on a pay-as-you-go basis.

2. What are the key characteristics of cloud computing?

Web-based, easily provisioned, highly economical, very flexible and reliably scalable.

3. How is cloud computing segmented, e.g. SaaS, PaaS, etc.?

Everyone uses SaaS and cloud computing interchangeably, starting with Salesforce.com and the press. THINKstrategies distinguishes them in the following way – Cloud computing has emerged a broad set of loosely coupled web-based enabling tools and services in response to the success of SaaS. SaaS solutions are ‘packaged’ applications acquired in a pay-as-you-go fashion and delivered via the Web. PaaS is an integrated set of development and delivery tools and services which permit a vendor or user organization to build their own SaaS solutions.

4. What makes this different than the old ASP model?

ASPs were outsourcers who were simply moving the same old crappy apps out of the customer’s data center and operating it in a centralized and remote data center. They didn’t have a better pricing model or offer any new functionality.

Today’s SaaS/PaaS/cloud computing solutions have been built to reside on the web, where it can better serve a more dispersed and mobile customer base with more user-friendly and flexible pricing and packaging.

5. Why has Larry Ellison resisted the SaaS/cloud computing movement?

It is a Machiavellian subterfuge aimed at downplaying the market opportunity to discourage potential competitors, such as SAP, from entering the market.

Ironically, Ellison originated the idea of the ‘thin client’ during the dot.com boom and Oracle was a pioneer in the ASP era. Today, Oracle is a major supplier of database systems for many of the largest SaaS companies, including Salesforce.com. 

Oracle is also the purveyor of a widening array of on-demand software services, starting with Siebel On-Demand and most recently adding Sourcing On-Demand. And of course, Ellison is also a personal investor in Salesforce.com and NetSuite.

6. Why is cloud computing a major transformation of the IT/software industry and not just another overhyped trend?

First, because SaaS/cloud computing solutions are delivering measurable business benefits, and generating high customer satisfaction and referral rates.

Second, corporate executives and end-users need and want a better way to acquire and utilize technology and business applications to meet their rapidly changing business and workplace requirements.

Third, a new generation of workers—Generation “F” for Facebook, as Gary Hamel described in the WSJ Tuesday—are entering the market who have grown up online and will demand web-based services to do their jobs.

Finally, because today’s tough economic climate demands that organizations of all sizes fundamentally change the way they do business, and few will resist the temptation to revamp the way they procure and use technology and applications so they can get a better ROI at a lower TCO.

I moderated a panel at OpSource’s SaaS Summit this week entitled “Selling SaaS to the Enterprise” which included representatives from Cast Iron Systems, Oracle and the Business Objects unit of SAP, as well as the Manager of Global Operations Business Technology at Pfizer.

They all agreed that SaaS and cloud computing are making serious inroads into the enterprise but still face significant challenges, including scalability, security and flexibility issues.

In response to the flexibility topic, there was general consensus among the panelists that customers want a choice of on-premise and on-demand alternatives to serve various corporate requirements.

Although I’m very proud to have correctly predicted many of the major trends which have shaped the SaaS market evolution, I’ve never believed that the world would move entirely to an all on-demand environment for a variety of customer and vendor-driven reasons. Therefore, I’ve always expected most organizations to operate in an hybrid environment.

As the SaaS movement gains mainstream acceptance, it also becomes less of a revolution. As a result, the radical view of an all, on-demand world has given way to a more realistic expectation of a mixed computing environment, albeit dramatically less dependent on inefficient, legacy on-premise hardware and software.

My previous blog post suggested that the heterogeneous computing requirements of customers calls for a new definition of hybrid solutions based on the portability of SaaS solutions so they can offer customers a choice of on-demand and on-premise alternatives.

The post generated a long list of responses from a wide array of SaaS vendors offering these alternatives, as well as a few purists who said it couldn’t or shouldn’t be done.

Microsoft’s GM of ISV and National System Integrator Partners, Greg Urqhart, gave an updated version of the company’s ‘Software Plus Services’ pitch at the SaaS Summit which Microsoft has been promoting for a few years.

It has been easy for industry purists to ridicule Microsoft’s S+S idea as a self-serving rationalization for justifying its legacy, on-premise business while also attempting to hold current and prospective customers by promising competitive on-demand solutions sometime in the future.

While these are legitimate criticisms which I share, I also believe that Microsoft’s view of customers’ preference for computing choices is right on.  The question is when and how will Microsoft fulfill its promise to deliver a viable and competitive portfolio of on-demand solutions which satisfy customers’ rapidly changing technical and business requirements.

In the meantime, Microsoft is depending on a series of incremental innovations, along with the power of its brand, ISV partner network and channel relationships to safeguard its immediate reputation and long-term revenue against the onslaught of today’s SaaS and cloud computing challenges.

These attributes also fit the criteria I laid out for winning in the Platform-as-a-Service (PaaS) business. Of course, it again depends on how well Microsoft can execute on its promises.

Last July, I offered my views on the similarities and differences between Software-as-a-Service (SaaS) and cloud computing. This past week, I had an opportunity to elaborate on the relationship between these two worlds and terms, along with Platforms-as-a-Service (PaaS), during a webcast hosted by Symplified entitled, “Beyond the Buzzwords”.

Then and now I believe cloud computing is an outgrowth of the success of the SaaS market and web-based, packaged applications. Cloud computing represents a rapidly growing array of web-based tools which enable users to build their own applications or utilities that can be deployed via the Internet (“cloud”) or ‘downloaded’ to an on-premise environment.

Much like the open source world, the cloud computing environment enables users to take advantage of a wide assortment of piece-parts from a variety of sources to create their own solutions for various project and production purposes. They both rely on incredibility economical development resources and generous community-minded contributors willing to share and swap ideas and outputs.

During last week’s webcast, the question was asked how Platforms-as-a-Service (PaaS) relates to SaaS and cloud computing. In my view, PaaS is a vendor-centric set of tools and resources which permit users to build apps and utilities which not only take advantage of the vendor’s holistic portfolio of technological capabilities, ranging from development to delivery, but also leverage the company’s customer base and/or channels to market.

I dissected some of these ideas and leading platform players last month. I also will be moderating a panel session at Interop in Las Vegas on May 19 entitled “SaaS, Pass and More: A Taxonomy of On-Demand Applications”, that will include executives from Cisco Systems, LongJump and Salesforce.com.

These topics will also be discussed at other events I’m attending and participating in over the coming weeks.

You can also obtain useful insights about how SaaS vendors are leveraging platforms in SoftLetter’s new SaaS Benchmark Study. My colleagues at Triple-Tree also published a useful report on platforms last year.